On March 13, 2023, Governor Pritzker signed the Paid Leave for All Workers (PLFAW) Act, making Illinois one of only three states that mandate employers provide paid leave to their employees for any reason (or no reason at all). The new law does not go into effect until January 1, 2024, but Illinois employers will need that time to adjust their policies and prepare for the change. While there is more, we need to learn, here is what we know so far:
Does The Paid Leave for All Workers Act Apply to All Employers?
Generally, yes, the new law applies to all Illinois employers regardless of how many employees a company may have. So unlike laws like the Family and Medical Leave Act that only applies to companies with 50 or more employees, the PFLAW applies to any business that has employees unless they fall under an exclusion, or the law is preempted by preexisting paid leave law.
While we address the exceptions later in this blog, the PLFAW Act does not apply to employers currently covered by a municipal or county ordinance that is in effect as of January 1, 2024, and requires the employer to provide any form of paid leave to their employees, including paid sick leave or other paid leave. This means that employers in Chicago subject to the Chicago Paid Sick Leave Ordinance and employers subject to the Cook County Paid Sick Leave Ordinance will be exempt from complying with the Illinois paid leave law. However, employers located in a Cook County municipality that opted out of the Cook County Earned Sick Leave Ordinance may be subject to the PLFAW Act.
Does The Paid Leave for All Workers Act Apply to All Employees?
Yes, all employees will be eligible for leave. The law applies to full-time, part-time, seasonal, temporary and other classifications. However, while all employees may earn or begin to accrue leave starting on day 1, they can’t use the paid leave until they have been on the job for 90 days.
How Much Paid Leave Do Employees Receive Under the Paid Leave for All Workers Act?
Under the PLFAW Act, eligible employees generally will be entitled to earn and use up to 40 hours of paid leave during a 12-month period.
How Is the Paid Time Off Earned?
Employers can elect to either frontload the leave or use an accrual method.
If an employer elects to “frontload”, that means an employee has earned all eligible leave as of day 1 of the new calendar year.
If an employer elects to use the “accrual method” the leave accrues at the rate of 1 hour for every 40 hours worked. The law presumes that exempt employees have worked 40 hours in each workweek for purposes of accrual, unless their regular workweeks are less than 40 hours.
How Is the Paid Time Off Used?
Employees can begin to use the paid leave after 90 days on the job, unless an employer allows them to use the leave earlier. Employees determine how much leave they want to use, but employers can set a minimum increment of no less than 2 hours per day.
Employees are not required to give a reason for taking the leave, and employers will not be allowed to require any documentation or certification of the need to take leave. Employers can require up to 7 days’ notice of foreseeable leave if they have a written policy provided to employees outlining notice requirements and procedures. If the leave is not foreseeable (i.e., in emergency situations), employees must provide notice as soon as practicable.
How Much Is the Employee Paid While on Leave?
The rate of pay for the paid leave will be at the employee’s hourly rate. For employees who are paid gratuities and commissions, they must be paid the greater of (1) the full minimum wage for the jurisdiction, or (2) their hourly rate. For salaried employees, the law presumes a 40-hour workweek for purposes of paid leave accrual, unless their regular workweek is less than 40 hours, in which case paid leave accrues based on that regular workweek.
Must The Paid Leave Carry Over or Can Employers Require Employees “Use It or Lose It”?
Employers who elect to frontload the leave are not required to allow employees to carryover unused leave into the next year. Instead, they can adopt a use-it-or-lose-it policy in which the employee must use all paid leave prior to the end of the benefit year or forfeit unused leave.
Employers who elect to use the accrual method (where employees accrue leave over time) must allow unused and accrued leave to carry over annually, but employers will not be required to provide more than 40 hours of leave for an employee in the designated 12-month period.
Must Employer Pay Out Leave on Termination:
The new law does not require employers to pay employees for unused paid leave upon termination or at the end of the benefit year unless the employer has credited the leave to an employee’s paid time off bank or employee vacation account. If an employee leaves and then returns to employment within 12 months, Employers will be required to restore the unused paid leave to the employee. We will need to wait for guidance on how this works in light of the Illinois Wage Payment and Collection Act that requires employers to pay out earned vacation time at the end of the employment relationship.
Does The Leave Have to Be Recorded?
Employers will be required to create records documenting the employee’s hours worked, leave accrued and taken, and any remaining paid leave. Employers must (1) maintain the records for at least 3 years, and (2) allow the Illinois Department of Labor (IDOL) access to the records.
Employers that use an accrual method must provide notice of the amount of leave accrued or used by an employee upon request.
Hopefully you have enough wall space, as the new law will require employers to post a notice (that IDOL will prepare) outlining the requirements of the act and information on filing a charge. Employers that have a significant amount of employees who do not read English will be required to request a notice in the appropriate language from IDOL.
What Are Remedies and Penalties?
The Illinois Department of Labor is responsible for administering and enforcing the PLFAW Act.
Employees may file complaints with the IDOL within three years of the alleged violation. Employers found to violate the PLFAW Act are subject to actual damages, compensatory damages, attorneys’ fees/costs, and civil penalties, as well as being subject to equitable relief. For example, Employers who fail to comply with the recordkeeping requirements may be liable for penalties of $2,500 per offense. Employers who violate the posting requirements can face a penalty of $500 for the first violation and $1,000 for each violation thereafter.
The IDOL can conduct investigations and refer matters to hearing. The state attorney general may enforce the collection of awards.
What Employers Are Excluded From the Paid Leave for All Workers Act?
Andy finally, the exclusions. The law does not apply to:
- school districts or park districts;
- students employed on a part-time, temporary basis by the college or university they attend;
- short-term employees of higher education institutions who are employed for less than 2 consecutive calendar quarters during a calendar year without a reasonable expectation that they will be rehired in a subsequent calendar year;
- employees working in the construction industry covered by a bona fide collective bargaining agreement;
- employees covered by a bona fide collective bargaining agreement with an employer that provides national or international services of delivery, pickup, and transportation of parcels, documents, and freight; or
- employers covered by municipal or county ordinances in effect on January 1, 2024, that provide for paid leave or paid sick leave.
So… What Does the New Paid Leave Act Mean for Illinois Employers?
It’s time to start thinking about updating that employee handbook (again). Employers should remember to revisit their PTO policies to make sure it meets the minimum requirement (40 hours) under the new law starting in 2024 and possibly update their existing handbooks. The new law sets the minimum standard for PTO, an employer can of course give more leave if they choose.
Employers who already provide more or equivalent PTO can keep their existing policies but should prepare to maintain records and provide or post the new notice from IDOL. Remember, failing to keep appropriate records comes with a hefty fine, so document, document, document!
If you fall into one of those areas where there is local ordinance in place and you think you are clear, think again. The Act mandates that local ordinances providing for paid leave enacted or amended in the future must set leave provisions that are equal to or more generous than those in the Act. Chicago and Cook County employers who are subject to these paid sick leave ordinances must be prepared for the possibility that these municipalities will expand their paid leave requirements to match or exceed the requirements of the Illinois Paid Leave for All Workers Act
Should you have any questions about the Illinois Paid Leave for All Workers Act or updating your current employment policies, contact Navigant Law Group, LLC at (847) 253-8800 or email us at email@example.com.
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